Menchise v. Akerman Senterfitt
| Decision Date | 02 July 2008 |
| Docket Number | No. 07-13046.,07-13046. |
| Citation | 532 F.3d 1146 |
| Parties | Chapter 7 Trustee Douglas N. MENCHISE, Plaintiff-Appellant, v. AKERMAN SENTERFITT, a Florida professional association, Michael I. Goldberg, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
David A. Maney, Lee S. Damsker, Maney, Damsker, Jones, Kiely & Kuhlman, P.A., Tampa, FL, for Plaintiff-Appellant.
Marie A. Borland, Benjamin H. Hill, III, Erik R. Matheney, Mark J. Criser, Hill, Ward & Henderson, P.A., Tampa, FL, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Florida.
Before EDMONDSON, Chief Judge, PRYOR, Circuit Judge, and JOHNSON,* District Judge.
The trustee for the estate of Terri L. Steffen appeals an award of attorney's fees to Akerman, Senterfitt, & Eidson, P.A., and attorney Michael I. Goldberg (collectively "Akerman") under Florida law. Fla. Stat. § 768.79. Steffen argues that section 768.79 is inapplicable in a bankruptcy case and its plain language applies to cases brought only in the "courts of" Florida. Steffen also argues that section 768.79 is preempted by Federal Rule of Civil Procedure 68. Finally, Steffen contends that the district court abused its discretion by denying her requests for discovery and an evidentiary hearing. These arguments fail. Section 768.79 applies in this bankruptcy proceeding, cannot be interpreted to discriminate against a federal forum, and is not preempted by Rule 68. The district court also did not abuse its discretion by denying Steffen's meritless requests for discovery and an evidentiary hearing. We affirm.
Steffen's husband, Paul Bilzerian, was convicted of defrauding the United States. United States v. Bilzerian, 926 F.2d 1285, 1299 (2d Cir.1991). After Bilzerian's conviction, the Securities and Exchange Commission filed a civil suit for violations of the securities laws against Bilzerian. SEC v. Bilzerian, 1991 WL 83964 (D.D.C. Apr. 8, 1991), aff'd, 29 F.3d 689 (D.C.Cir.1994). The district court for the District of Columbia found Bilzerian liable for securities fraud and ordered him to disgorge over sixty million dollars in illegal profits. SEC v. Bilzerian, 1993 WL 542584, at *1 (D.D.C. June 25, 1993); SEC v. Bilzerian, 814 F.Supp. 116, 121-24 (D.D.C.1993), aff'd, 29 F.3d 689 (D.C.Cir.1994); SEC v. Bilzerian, 1991 WL 83964, at *1 (D.D.C. Apr. 8, 1991), aff'd, 29 F.3d 689. Bilzerian filed for bankruptcy after he transferred his interest in assets that he owned with Steffen jointly to Steffen individually. See Steffen v. Gray, Harris & Robinson, P.A., 283 F.Supp.2d 1272, 1276 (M.D.Fla.2003) (hereinafter Steffen I), aff'd, 138 Fed.Appx. 297 (11th Cir.2005) (unpublished decision) (hereinafter Steffen II).
The district court held Bilzerian in civil contempt and determined that his transfer of assets violated the disgorgement order. SEC v. Bilzerian, 112 F.Supp.2d 12, 13 (D.D.C.2000). The district court appointed a receiver for the purpose of "identifying, marshalling, receiving, and liquidating" Bilzerian's assets in satisfaction of the disgorgement order. SEC v. Bilzerian, 127 F.Supp.2d 232, 232 (D.D.C.2000). At the request of the receiver, the district court froze Steffen's assets and the assets of her entities based on the receiver's belief that Steffen possessed property in which Bilzerian had an interest. See Steffen v. Akerman Senterfitt, 2005 WL 3277894, at *2 (M.D.Fla. Dec. 2, 2005).
Steffen retained Akerman, for which Goldberg worked as an attorney, to free Steffen's assets and assets of her entities. See id. Two days later, Akerman consented to an extension of the asset freeze and stipulated to an order for the production of documents by Steffen and her entities to the receiver. See id. Akerman later moved to withdraw as Steffen's counsel, and the district court granted the motion. See id. at *3.
In 2001, Steffen filed a petition under Chapter 11 of the Bankruptcy Code. See Steffen I, 283 F.Supp.2d at 1280. Steffen later intervened in the action that the Securities and Exchange Commission brought against Bilzerian and challenged the asset freeze. Steffen v. United States (In re Steffen), 349 B.R. 734, 736-37 (M.D.Fla.2006). In December 2001, Steffen entered a settlement agreement with the Commission in which she agreed to transfer a fifty-percent interest in her assets to the receiver in exchange for dissolution of the freeze order. Id. at 737.
In 2002, Steffen filed a legal malpractice action against Gray, Harris & Robinson, P.A., which had represented her in the litigation with the Commission after Akerman withdrew from the case. Steffen I, 283 F.Supp.2d at 1280. Steffen alleged that the firm had negligently advised her to form a system of trusts that exposed her assets during the Bilzerian contempt litigation. Id. at 1280. The district court granted summary judgment to the firm, id. at 1285, and we affirmed, Steffen II, 138 Fed.Appx. 297.
In 2003, Steffen filed a one-count complaint for legal malpractice against Akerman as an adversary proceeding in the bankruptcy court, and the district court later withdrew the reference to the bankruptcy court. Akerman served Steffen with an offer to settle in the amount of $10,000 under section 768.79 of the Florida Statutes, but this offer did not apportion liability between the law firm and Goldberg. After the decision of the Florida Supreme Court in Lamb v. Matetzschk, 906 So.2d 1037 (Fla.2005), Akerman served Steffen with a second offer, which apportioned the amount between the defendants and was conditioned upon the acceptance by Steffen of the offer from each defendant. Steffen did not accept either offer. The district court granted summary judgment in favor of Akerman, and we affirmed.
Akerman moved for attorney's fees under section 768.79 of the Florida Statutes. We granted the motion of Akerman to transfer its application for an award of appellate attorney's fees to the district court. Steffen moved for an extension of time to respond to the motion for attorney's fees, a period of discovery related to that motion, and an evidentiary hearing on that motion. The district court denied Steffen's motion.
The district court held that Akerman was entitled to attorney's fees but denied the requested amount. The district court ordered Akerman to file a second amended motion for attorney's fees that included a detailed billing statement and affidavits regarding reasonableness. After Akerman filed its second amended motion for attorney's fees with appendices, and the district court thoroughly reviewed each billing entry, the district court awarded Akerman $223,158.97 in attorney's fees.
Steffen appealed the award of attorney's fees. The bankruptcy court later converted Steffen's bankruptcy case from a Chapter 11 reorganization to a Chapter 7 liquidation and appointed Douglas N. Menchise as the trustee of the estate. Akerman moved to substitute Menchise as the appellant in this appeal, and we granted the motion.
We review the decision of the district court to award attorney's fees for an abuse of discretion. Taylor v. City of Fort Lauderdale, 810 F.2d 1551, 1556 (11th Cir. 1987). "To the extent that the district court's conclusion implicates a question of law, we review de novo." Barnes v. Broward County Sheriff's Office, 190 F.3d 1274, 1276-77 (11th Cir.1999) (citing Preserve Endangered Areas of Cobb's History, Inc. v. U.S. Army Corps of Eng'rs, 87 F.3d 1242, 1246 (11th Cir.1996)). We review discovery rulings and the denial of a request for an evidentiary hearing for an abuse of discretion. Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1121 (11th Cir.2004).
We address Steffen's arguments in two parts. First, we conclude that the district court did not err when it applied section 768.79 in this bankruptcy proceeding. Second, we conclude that the district court did not abuse its discretion when it denied Steffen's requests for discovery and an evidentiary hearing.
A Florida statute provides, "In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney's fees ... if the judgment is one of no liability...." Fla. Stat. § 768.79(1). The record establishes that Akerman, as a defendant against a complaint of malpractice governed by Florida law, filed an offer of settlement that Steffen rejected, and a judgment of no liability was entered later in favor of Akerman. The main question in this appeal is whether the district court was bound to apply section 768.79 in this non-core bankruptcy proceeding.
Steffen argues that section 768.79 is inapplicable for two reasons. First, Steffen argues that section 768.79 does not apply in bankruptcy proceedings. Second, Steffen argues that section 768.79 is preempted by Federal Rule of Civil Procedure 68. These arguments fail.
Steffen argues that section 768.79 is not substantive law in bankruptcy proceedings, but we disagree. We have held that section 768.79 is substantive law in diversity cases, Jones v. United Space Alliance, L.L.C., 494 F.3d 1306, 1309 (11th Cir.2007), and we have concluded that the substantive law of the forum state governs issues of state law that arise in bankruptcy proceedings. See Colwell v. Royal Int'l Trading Corp. (In re Colwell), 196 F.3d 1225, 1226 (11th Cir.1999); Fruehauf Corp. v. Revitz (In re Transystems, Inc.), 569 F.2d 1364, 1366 (5th Cir.1978). Steffen's malpractice claim is governed by Florida law in the bankruptcy court, and section 768.79 applies to this appeal.
Steffen also argues that the plain language of section 768.79 precludes its application to actions filed in federal court. Section 768.79(1) applies to ...
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